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Apple\'s iPod, iTunes help triple digital music sales

updated 01:20 pm EDT, Mon October 3, 2005

Digital music sales triple

Sales of digital music tripled in the first half of 2005, , the iPod popularity, and mobile "ringtunes"--even as global music sales fell 1.9 percent. According to Reuters, digital music now makes up six percent of total sales, or $790 million, and sales of CDs and music in other physical formats continued a long decline that the music industry blames on piracy, falling to $13.2 billion from $13.4 billion one year earlier. The IFPI reportedly said that lower CD prices, flagging DVD music video sales and competition from other entertainment sectors also contributed to the decline. In the United States, which is the world's biggest music market, physical music sales fell 5.3 percent by value,




by MacNN Staff

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  1. MacNorway

    Joined: Dec 1969

    0

    Sales are up

    $200 million in less sales when CD prices have been cut, digital sales are cheaper than physical copies, digital sales cuts manufacturing costs etc. probably mean that they've sold MORE music by the unit than before and even earned better on that amount too. What has IPFI to tell us about that? Statistics is a tool to help you say exactly what you want to say, not to always say the truth...

  1. davedawgnyc

    Joined: Dec 1969

    0

    Music Industry GREED!!!

    And the Major Music Labels still complain that they don't get a good enough deal with the iTunes Music Store! They don't spend money on advertising, manufacturing, packaging and distribution of physical CDs, yet they still want iTMS to cater to their financial terms - specifically charging more. Puh-leaze! They should be a little more grateful someone (Apple/Steve Jobs) showed them how to sell music in the 21st Century.

  1. MacNorway

    Joined: Dec 1969

    0

    Break it down...

    Besides, $200 million in less sales (is this retail level or label level, BTW? Let's say it's label level) is just 20 majors acts selling a million less records each, going by an average price of $10 from the labels (which may be off). This is just the result of a flop Michael Jackson record or a few other less-than-expected sales from some giant acts. Going by all acts, it's just the equivalent of a couple of CD's less per artist. Again, in VALUE, not by numbers.

  1. vasic

    Joined: Dec 1969

    0

    They are making profit!

    It is safe to assume that the figures are gross revenue, and not net profits (which are always much trickier to figure out/report). That means, the digital sales went up by about $520M. The CDs declined by $200M. This is telling me that the revenue actually went up by $320M!! In addition, as this is (most likely) gross revenue, the actual profits are even bigger, since profit on CD revenue is significantly lower than profit on digital downloads (packaging, shipping, inventory tracking...). I think that both Steve and the Labels know who's winning here. Steve's doing things exactly right; meanwhile, labels are still trying to figure out how to initiate damage control. After about (almost) a hundred years of basing it on the same business model (i.e. completely controlling everything, from production to distribution), they're losing ground and control over distribution. Nobody over there has a clue how to respond. Ultimately I really, really hope the way this goes down ends up being good for the musicians (I don't really care if it ends up being good or bad for the labels).

  1. MacNorway

    Joined: Dec 1969

    0

    Surely

    Of course they are making a profit. Another spin on this is that while sales by value are down, so are probably production costs as most businesses have been laying off people, restructured, merged etc. etc. as well as physical CD production becoming cheaper all the time. The labels are in fear of loosing control - just look at the artist riot in Japan over labels not joining iTMS there.

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